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The Best of What They Said and I Read Week Ending 5/6/18


Short excerpts from articles I found interesting.

I may not agree with the author and the following material is not intended as investment advice.

Barron’s  – May 5, 2018 – The Dow Takes Investors on a Wild Ride to Nowhere - by Ben Levison

“…Yet the Dow Jones industrial Average finished the week off only 48.68 points, or 0.2%, at 24,262.51, while the Standard & Poor’s 500 index also declined 0.2%, to 2663.42. The Nasdaq Composite bucked the trend by climbing 1.3% to 7209.62, as the tech sector soared 3.2%.”

“…Last week the central bank indicated that interest rates would continue to head higher even as they left rates unchanged. There was nothing very new in the statement, says Joseph LaVorgna, chief economist at Natixis CIB Americas. But the Fed’s commitment to further rate hikes means the yield curve will continue to flatten, volatility will remain elevated, and the chances of a monetary-policy mistake will grow.  “Everything is about the Fed,” says LaVorgna.”

“…Bank of America Merrill Lynch technical research analyst Stephen Suttmeier notes that during a midterm election year, stocks have averaged losses in May, June, August, and September, with July the only month averaging a positive return. The year typically ends with a bang, Suttmeier says, as the S&P 500 has averaged a 6.4% rise in the final three months of the year. “Midterm election years [are] difficult during the summer, but very bullish in the fourth quarter,” he explains.”

 Kiplinger’s Personal Finance – May, 2018 – Juicier Yields on Money Funds – by Lisa Gerstner

“For years Money Market mutual funds have paid practically nothing.  But each time the Federal Reserve lifts short-term interest rates, yields on money market funds tend to rise in tandem.  “That’s one of their most attractive qualities,” says Peter Crane, president of Crane Data, a money fund research company.  Many money funds yield more than 1%, and Crane expects yields on some funds to surpass 2% this summer.  Rates on savings accounts from banks have also been increasing but have not kept pace with Fed rate hikes…”   

U.S. Global Investors – May 4, 2018 – Investor Alert – by Frank Holmes

“…Morningstar reports that, from March 2001 to March 2018, China stocks had the strongest annualized growth among global markets. Over the 17-year period, the MSCI China Index delivered an amazing 12.2 percent in annualized total returns, compared to the MSCI Emerging Markets Index with 10.7 percent and the MSCI World Index with 6 percent.”

“…America’s companies are flush with cash thanks to the big cut in the corporate tax rate. The roughly 180 companies in the S&P 500 Index that have reported results saw their effective tax rate drop by 6 percent on average in the first quarter. That saved them a total of almost $13 billion in taxes, an analysis by Bloomberg showed.”

“…Detroit exited years of state financial oversight on Monday, showing the city has made strides toward reversing the long economic and fiscal decline that pushed it into a record-setting bankruptcy. Michigan’s Financial Review Commission, set up in 2014 to monitor Detroit, voted unanimously on Monday to end to its oversight of a city that has been under some form of state supervision since 2012.”

“…Although the big announcement came this week that Goldman Sachs will be opening a cryptocurrency trading desk, some think it will do little to spur coins such as bitcoin back into the spotlight and gain the trust of investors. In a Bloomberg opinion piece, Lionel Laurent writes that big investors have long memories and won’t easily forget that bitcoin’s price doubled in one month then halved in the next month. Laurent also points out that many legal questions are still unanswered about the cryptocurrency space and that the G20 has yet to issue a common global position.”

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